China’s One Belt, One Road Runs Into a Few Hiccups

Troubled ports in Pakistan and Sri Lanka, envisioned as part of China’s string of pearls linking the Eurasian heartland to the Middle Kingdom, exemplify political pitfalls that threaten Beijing’s ambitious One Belt, One Road project. Political violence over the past decade has stopped Pakistan’s Gwadar port from emerging as a major trans-shipment hub for China.

By James Dorsey
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Troubled ports in Pakistan and Sri Lanka, envisioned as part of China’s string of pearls linking the Eurasian heartland to the Middle Kingdom, exemplify political pitfalls that threaten Beijing’s ambitious One Belt, One Road project.

Political violence over the past decade has stopped Pakistan’s Gwadar port from emerging as a major trans-shipment hub in Chinese trade and energy supplies while turmoil in Sri Lanka threatens to dissuade Chinese investors from sinking billions into the country’s struggling Hambantota port and planned economic hub.

The problems of the two ports serve as pointers to simmering discontent and potential resistance to China’s ploy for dominance through cross-continental infrastructure linkage across a swath of land that is restive and ripe for political change.

Chinese, Pakistani, and Russian officials warned in December that militant groups in Afghanistan, including the Islamic State (IS) had stepped up operations in Afghanistan. IS, in cooperation with the Pakistani Taliban, launched two months later a wave of attacks that has targeted government, law-enforcement agencies, the military, and minorities and has killed hundreds of people.

China is investing $51bn in Pakistan’s infrastructure and energy, including Gwadar port in the troubled province of Balochistan, which is struggling to attract business nine years after it was initially inaugurated. The government announced this week that it had deployed 15,000 troops to protect China’s investment in Pakistan, a massive project dubbed the China-Pakistan Economic Corridor (CPEC).

For Gwadar to become truly viable, Pakistan will have to not only address Baluch grievances that have prompted militancy and calls for greater self-rule, if not independence, but also ensure that Baluchistan does not become a playground in the bitter struggle for regional hegemony between Saudi Arabia and Iran.

To do so, Pakistan will have to either crack down on militant Afghan groups with the Taliban in the lead, who operate with official acquiescence out of the Baluch capital of Quetta or successfully facilitate an end to conflict in Afghanistan itself.

That is a tall order that, in effect, would require changes in longstanding Pakistani policies. Gwadar’s record so far bears this out. Phase II of Gwadar was completed in 2008, yet few ships anchor there and little freight is handled.

Success would also require a break with long-standing Chinese foreign and defence policy that propagates non-interference in the domestic affairs of other countries. China has pledged $70m in military aid to Afghanistan, is training its police force, and has proposed a four-nation security bloc that would include Pakistan, Afghanistan, and Tajikistan.

A mere 70 kilometres farther west of Gwadar lies Iran’s southernmost port city of Chabahar that has become the focal point of Indian efforts to circumvent Pakistan in its access to energy-rich Central Asia and serve as India’s Eurasian hub by linking it to a north-south corridor that would connect Iran and Russia. Investment in Chabahar is turning it into Iran’s major deep water port outside the Strait of Hormuz that is populated by Gulf states hostile to the Islamic republic. Chabahar would also allow Afghanistan to break Pakistan’s regional maritime monopoly.

Former Sri Lankan president Mahinda Rajapaksa warned Chinese officials in December that public protests would erupt if plans proceeded to build in Hambantota a 6,000-hectare economic zone that would buffet a $1.5bn-deep sea port, a $209m international airport, a world-class cricket stadium, a convention centre, and new roads. Protests a month later against the zone turned violent. Similar protests against Chinese investment have also erupted in recent years in Kyrgyzstan, Kazakhstan, and Tajikistan.

In Sri Lanka, the government has delayed the signing of agreements with China on the port and the economic zone after the protests catapulted the controversy onto the national agenda with opposition politicians and trade unions railing against them. A Sri Lankan opposition member of parliament moreover initiated legal proceedings to stop a debt-for-equity deal with China.

China’s ambassador to Sri Lanka, Yi Xianliang, warned that the protests and opposition could persuade Chinese companies to walk away from the $5bn project. “We either go ahead or we stop here,” Yi said.

“The Hambantota fiasco is sending a clear message to Beijing: showing up with bags of money alone is not enough to win a new Silk Road,” commented Wade Shepard, author of a forthcoming book on China’s One Belt, One Road initiative.

Adding to China’s problems is its apparent willingness to, at times, persuade its partners to circumvent or flout international standards of doing business. A European Union investigation into a Chinese-funded $2.9bn rail link between the Hungarian capital of Budapest and the Serbian capital of Belgrade could punch a hole into Chinese plans to extend its planned Asian transportation network into Europe. The investigation is looking at whether the deal seemingly granted to Chinese companies violated EU laws stipulating that contracts for large transportation projects must be awarded through public tenders.

The total sum of problems China is encountering across Eurasia highlights a disconnect between grandiose promises of development and improved standards of living and the core of Chinese policy: an insistence that economics offer solutions to deep-seated conflicts, local aspirations, and a narrowing of the gap between often mutually exclusive worldviews. It also suggests that China believes that it can bend, if not rewrite rules, when it serves its purpose.

To be sure, protests in Sri Lanka and Central Asia are as much about China as they are expressions of domestic political rivalries that at times are fought at China’s expense. Even so, they suggest that for China to succeed, it will not only have to engage with local populations, but also become a player rather than position itself as an economic sugar daddy that hides behind the principle of non-interference and a flawed economic win-win proposition.

Dr. James M. Dorsey is a senior fellow at the S. Rajaratnam School of International Studies, co-director of the University of Würzburg’s Institute for Fan Culture, and the author of The Turbulent World of Middle East Soccer blog, a book with the same title, Comparative Political Transitions between Southeast Asia and the Middle East and North Africa, co-authored with Dr. Teresita Cruz-Del Rosario and a forthcoming book, Shifting Sands, Essays on Sports and Politics in the Middle East and North Africa

China is facing unexpected challenges to its most recent economic projects in Sri Lanka. In response to the latest bilateral deal signed in December to further develop the port of Hambantota and to build a massive industrial zone nearby, hundreds of Sri Lankans rose up in protest at the prospect of being driven from their homes. It marked the first time that demonstrations against Chinese investment in Sri Lanka had taken a violent turn, as police officers dispersed protesters with tear gas and water cannons.

These protests are the latest example of how Beijing’s “New Silk Road” (NSR) initiative to open new land and maritime trade routes is stumbling over an increasing number of impediments – and fueling unstable situations in countries already primed with the potential for conflict.
This trend is unfolding not only in Sri Lanka, one of the baubles in Beijing’s “string of pearls,” a network of commercial and military interests that extends from the Chinese mainland to the Horn of Africa. It is also set to play out in Djibouti, known as a “superpowers’ playground” thanks to its hosting of American, French, Japanese, and now Chinese military installations. To avoid feeding further resentment – and potentially setting off a full-blown conflict that would eclipse what just took place in Sri Lanka – Beijing should proceed with caution as it rolls out the NSR.

In Sri Lanka, the most recent wave of strife arose after President Maithripala Sirisena, who had promised during his campaign to ditch Chinese contracts seen as unfair, approved an agreement to lease an 80% stake in the port to state-run China Merchants Port Holdings for 99 years in exchange for $1.1 billion in debt relief. Officials claimed he had been obligated to make the concession due to Sri Lanka’s high debt. However, opposition politicians shot back that the new deal conceded too much to China and trampled on Sri Lanka’s sovereign rights.

Such anger at perceived infringements on Sri Lanka’s sovereignty had been simmering for a while. Beijing first started to make inroads in the country in 2005, after India abandoned efforts to quell Sri Lanka’s intermittent civil war. China offered Sri Lanka $1 billion in military aid, a whopping sum for a country whose GDP was then a mere $25 billion. Now, Colombo is indebted to Beijing to the tune of $8 billion, or more than 12% of its entire debt. With Sri Lankans increasingly viewing Chinese investment through neo-colonial tinted glasses, the Hambantota project might have been the last straw.

While Sri Lanka desperately needs debt relief and investment, the protesters had plenty of reason to rebuff China’s wads of cash. After all, Beijing has not invested this money for Colombo’s interests. If Sri Lanka did not possess deep harbors and a strategic position near some of Asia’s busiest shipping routes, conveniently located along the “string of pearls,” it’s doubtful China would even have noticed the island nation. It seems that after the most recent economic deal was renegotiated even further in Chinese favor, Sri Lankans started to realize a pattern and reacted with justifiable anger.

What’s more, China’s new military base in the country has ruffled the feathers of the Trump administration. Ostensibly part of the NSR, the Chinese base is just a few kilometers away from Camp Lemonnier, the hub of operations for US Africa Command. The proximity of the bases is uncomfortable for both sides – as well as for Djibouti, which might end up regretting the presence of rival superpowers on its turf.

The Trump administration is unlikely to take kindly to the increased financial leverage that Beijing holds over Djibouti, and may shy away from providing support to Djibouti in the future after demonstrating his opposition to foreign aid during his campaign, the White House budget director has now confirmed that Trump will propose “fairly dramatic cuts” in the US foreign aid budget later this month. His administration is unlikely to make an exception for Djibouti, which has been led for nearly 20 years by an authoritarian president with a taste for political repression, restraints on basic liberties, and crackdowns on opposition politicians.

Whether or not the US cuts ties with Djibouti, the situation is unlikely to turn out well as Washington will have to confront the expansion of China’s overseas military interests at some point. The way Beijing has been barreling ahead with the NSR is becoming increasingly dangerous, resulting in just the past few months alone in the creation of preferential economic projects in post-conflict states like Sri Lanka and the buildup of military firepower in unstable dictatorships like Djibouti. If China does not proceed with more caution, the blowback in Djibouti could make Sri Lanka look like a schoolyard scuffle.

The United States established Camp Lemonnier in Djibouti after the terror attacks of Sept. 11, 2001.

CreditJason Straziuso/Associated Press

DJIBOUTI — The two countries keep dozens of intercontinental nuclear missiles pointed at each other’s cities. Their frigates and fighter jets occasionally face off in the contested waters of the South China Sea.

With no shared border, China and the United States mostly circle each other from afar, relying on satellites and cybersnooping to peek inside the workings of each other’s war machines.

But the two strategic rivals are about to become neighbors in this sun-scorched patch of East African desert. China is constructing its first overseas military base here — just a few miles from Camp Lemonnier, one of the Pentagon’s largest and most important foreign installations.

With increasing tensions over China’s island-building efforts in the South China Sea, American strategists worry that a naval port so close to Camp Lemonnier could provide a front-row seat to the staging ground for American counterterror operations in the Arabian Peninsula and North Africa.

“It’s like having a rival football team using an adjacent practice field,” said Gabriel Collins, an expert on the Chinese military and a founder of the analysis portal China SignPost. “They can scope out some of your plays. On the other hand, the scouting opportunity goes both ways.”

Established after the terror attacks of Sept. 11, 2001, Camp Lemonnier is home to 4,000 personnel. Some are involved in highly secretive missions, including targeted drone killings in the Middle East and the Horn of Africa, and the raid last month in Yemen that left a member of the Navy SEALs dead. The base, which is run by the Navy and abuts Djibouti’s international airport, is the only permanent American military installation in Africa.

Beyond surveillance concerns, United States officials, citing the billions of dollars in Chinese loans to Djibouti’s heavily indebted government, wonder about the long-term durability of an alliance that has served Washington well in its global fight against Islamic extremism.

Just as important, experts say, the base’s construction is a milestone marking Beijing’s expanding global ambitions — with potential implications for America’s longstanding military dominance.

“It’s a huge strategic development,” said Peter Dutton, professor of strategic studies at the Naval War College in Rhode Island, who has studied satellite imagery of the construction.

“It’s naval power expansion for protecting commerce and China’s regional interests in the Horn of Africa,” Professor Dutton said. “This is what expansionary powers do. China has learned lessons from Britain of 200 years ago.”

Chinese officials play down the significance of the base, saying it will largely support antipiracy operations that have helped quell the threat to international shipping once posed by marauding Somalis.

“The support facility will be mainly used to provide rest and rehabilitation for the Chinese troops taking part in escort missions in the Gulf of Aden and waters off Somalia, U.N. peacekeeping and humanitarian rescue,” the Defense Ministry in Beijing said in a written reply to questions.

In addition to having 2,400 peacekeepers in Africa, China has used its vessels to escort more than 6,000 boats from many countries through the Gulf of Aden, the ministry said. China’s military has also evacuated its citizens caught in the world’s trouble spots. In 2011, the military plucked 35,000 from Libya, and 600 from Yemen in 2015.